Broker Misconduct

Securities Cases: Massachusetts Charges Royal Alliance Over Unsuitable Investment Advice, Ex-Schwab Rep. is Fined For Alleged False Statements, and Texas Broker Accused of Bank Fraud Gets His CFP Designation Suspended

Published on: January 24, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Former Centaurus Financial Broker’s Certified Financial Planner Designation is Suspended

The Certified Financial Planner Board of Standards has suspended Texas broker’s Larry J. Templin’s CFP designation. The interim suspension comes after Templin, who is accused of bank fraud, refused to provide the Financial Industry Regulatory Authority (Finra) with information related to the allegations against him.

Templin was a Centaurus Financial broker until last year when he was fired by the Texas-based brokerage firm. Previously, he was registered with USAllianz Securities and First Global Capital, which are both headquartered in Texas. Templin worked in the securities industry for over 20 years.

Finra Bars Another Ex-Morgan Stanley Representative, Fines Firm $10M for AML Detection Deficiencies, and Orders It To Pay Two Investors $4.2M For Broker Fraud

Published on: January 10, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Daniel Todd Levine, a former Morgan Stanley (MS) broker, has been barred by the Financial Industry Regulatory Authority after he failed to cooperate in a probe into allegations that he may have taken part in outside business activities that he did not disclose to the broker-dealer while he worked for the firm. Levine was a Morgan Stanley broker based in Denver, Colorado between 2013 and July 2018 when he stepped down. His next employer was First Financial Equity Corp., but that brokerage firm fired him a few weeks later after he did not notify them about the FINRA investigation.

According to Levine’s BrokerCheck record, he previously worked with Prudential Securities, Merrill Lynch, and UBS (UBS). He was employed in the securities industry for over 20 years.

A number of other former Morgan Stanley brokers have recently made news headlines over allegations of broker fraud. Last month, FINRA announced that it had filed a lawsuit against Ami Forte, who is accused of making unauthorized trades in the account of now deceased Home Shopping Network co-founder Roy M. Speer. In November, former Morgan Stanley financial adviser James Polese was sentenced to five years behind bars after pleading guilty to defrauding customers of over $1M.

Houston, TX-Based Brokerage Firm Next Financial is Acquired by Atria

Published on: January 9, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Next Financial Group Inc. will be purchased by Atria Solutions. The Houston-based independent broker-dealer is the fourth brokerage firm that Atria, which is located in Dallas, has acquired since 2017. The other brokerage firms are Cadaret Grant & Co., Cusco Financial Services, and Sorrento Pacific Financial.

Next Financial currently has almost 540 advisers and representatives and nearly $13B in assets under management. According to InvestmentNews, Under the Next Financial deal, Atria will acquire the broker-dealer and its related companies. Following the acquisition, Atria will work with almost 2,000 advisers with about $65B in assets under administration.

Next Financial’s BrokerCheck record shows 19 disclosure events that have been settled, usually without the firm admitting to or denying the findings, for various causes, including:

Ex- Wells Fargo Broker Faces 128 Felony Counts in Alleged $1M Ponzi Scam

Published on: January 3, 2019 | by Shepherd Smith Edwards & Kantas, LLP

John G. Schmidt, an ex-Wells Fargo (WFC) broker, is now facing 128 felony counts over his alleged running of a $1M Ponzi scam. Criminal charges include:

124 counts of forgery
1 count of telecommunications fraud

SEC Files Charges Against 10 Companies and 13 Unregistered Brokers That Sold Woodbridge Securities in $1.2B Ponzi Scam

Published on: December 26, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission has filed civil charges against a number of companies and brokers who illegally sold Woodbridge Group of Companies securities to retail investors. Woodbridge, which filed for bankruptcy protection last year, its owner Robert H. Shapiro, and several others have since been charged with running a $1.2B Ponzi scam that defrauded nearly 8,500 investors. Many of their victims were older investors who together took almost $400M out of their IRA to invest in the securities.

Now, the SEC is charging 13 unregistered brokers that were among the top sellers of Woodbridge securities. Collectively, they allegedly sold over $350M in the unregistered securities to more than 4,400 investors. The regulator contends that the defendants promoted the Woodbridge securities as “safe” investments, making millions of dollars in commissions from the sales even though they were not registered brokers or even affiliated with a registered brokerage firm and should never have sold the Woodbridge investments to begin with. The brokers named in the SEC broker fraud case include:

• Robert S. Davis, Jr., the VP of Old Securities Financial Group

Former Lombard Securities Broker Pleads Guilty in Multimillion-Dollar Ponzi Scam That Defrauded Older Investors

Published on: December 11, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Steven Pagartanis, an ex-New York broker with Lombard Securities, has pleaded guilty to wire fraud and mail fraud in a Ponzi scam that went on for more than 18 years and caused investors to lose more than $9M of the over $13M that they invested. Many of his victims were older investors who lost a significant amount of their life savings. Many of them had worked with Pagartanis for years.

According to the release by the US Attorney’s Office for the Eastern District of New York, from 1/2000 to 3/2018, Pagartanis persuaded older individuals to get involved in investments involving real estate, including those that had affiliations with an international hotel conglomerate and publicly traded entities. Investors were told that their principal was secure and they would make a fixed return of 4.5 to 8% yearly.

Pagartanis’ victims were instructed to write checks to an entity of which he was secretly in control. The former broker used different bank accounts to launder the stolen money that he then spent on his own expenses as well as to pay other investors their “interest or dividend payments” that they were owed. He set up bogus account statements so as to encourage further investing and to hide his fraud.

International Assets Advisory “Proudly” Hires Brokers With “Checkered” Pasts

Published on: December 10, 2018 | by Shepherd Smith Edwards & Kantas, LLP

A Florida-based wealth management firm is once again in the headlines over its hiring of brokers with “checkered” pasts. According to a recent Business Insider article, International Assets Advisory (IAA), which oversees approximately $2.5B in customer funds, “proudly hires” brokers that other investment firms wouldn’t even consider, including some with previous offenses on their record.

According to IAA president Ed Cofranceso, the firm’s hiring strategy lets him access a bigger talent pool while allowing some of those whom he employs to get a “second chance.” Cofranceso called his approach “American” and “Christian” and noted the adage about how every story has two sides. For example, the Business Insider article notes, one of the brokers that IAA hired had been fined and fired because his previous firm made him sell “bad products” to investors.

One headhunter interviewed for the news article notes that while the majority of employers will instantly nix any prospective applicants who respond “yes” to even one of nearly six dozen questions on the Financial Industry Regulatory Authority’s (FINRA) U4 registration form, IAA won’t disqualify these individuals right off the bat. Questions asked include whether applicants have been charged for misdemeanors or felonies and if they’ve ever had any “run-ins” with regulators. According to IAA General Counsel Myra Nicholson, candidates with such disclosures whom IAA eventually hires usually have to go through an “on-the-job” audit and may also be subject to more monitoring and certain restrictions.

Ex-LPL Financial Broker Gets 20 Years in Prison for Securities Fraud

Published on: November 6, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Sonya Camarco, an target=”_blank” rel=”noopener noreferrer”>ex-LPL Financial (LPLA) broker, has been sentenced to 20 years in prison after she admitted to stealing $1.8M from clients. Camarco, who worked for the brokerage firm in Colorado, was indicted by a grand jury last year on multiple counts of securities fraud. She pleaded guilty to one count of each.

According to the broker fraud case against her, between 2013 and 2017, Camaro stole over $1.8M from clients for her own use. In August 2017, LPL Financial fired her. That same month, the US Securities and Exchange Commission was able to get an emergency court order and asset freeze against Camarco. The SEC’s complaint said that the theft took place over 13 years and the ex-LPL broker lied to clients about the money she was taking from their accounts.

The SEC also accused Camarco of forging client signatures on checks and liquidating securities in their accounts so she could make unauthorized payments. When clients asked about the checks written to an entity named “C Investments”, Camarco lied by claiming that the entity was an outside investment she had made for them. The former broker also allegedly lied when LPL Financial confronted her about the fraud. All the while, she used client money to pay her mortgage and credit card bills.

Financial Fraud: Massachusetts Mayor is Accused of Bilking Investors, Former Wells Fargo Broker Allegedly Stole $1M From Older Clients, and the LendingClub Asset Management Settles $4.27M Securities Case

Published on: October 11, 2018 | by Shepherd Smith Edwards & Kantas, LLP

26-Year Old Mayor is Arrested and Accused of Investor Fraud

Jasiel Correira, who is the mayor of Fall River, Massachusetts, has pleaded not guilty to multiple criminal counts of wire fraud and tax fraud. The 26-year-old was arrested this week following allegations that he defrauded investors of over $230K.

Correira maintains that the investor fraud allegations are false. He refuses to step down as city mayor.

TD Ameritrade Fined $500K For Not Reporting Investment Advisers’ Suspect Activities

Published on: September 26, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission is ordering TD Ameritrade Inc. (AMTD) to pay a $500K fine for not submitting mandatory suspicious activity reports (SARs) even after the broker-dealer stopped doing business with 111 independent investment advisers. The regulator contends that between 2013 and September 2015, the firm ended its business relationships with these advisers, who were not TD Ameritrade employees, due to what it found to be “unacceptable business, credit, operational, reputational or regulatory risk” to itself or customers.

While the brokerage firm did submit a number of suspicious activity reports (SARs) regarding suspect transactions made by some of these advisers it had fired, it did not submit SARs reports on some of the other advisers with whom TD Ameritrade had also ended their business relationships.

The suspect activities at issue allegedly included suspicious trading—including moving losses from trade errors to clients—inappropriate money transfers, and making false and misleading statements to customers while serving as an investment adviser managing their TD Ameritrade accounts.